Grade School Money Lesson

I know, I know, grade school was a long time ago for most people reading a personal finance blog, but I am going to walk down this path anyway – maybe a worthwhile money lesson was hiding in my youth.

The three things I remember learning in grade school about money – How to balance a checkbook, something loosely tied to compound interest and if I went to college I will have student loans until I am 40.

Money Lesson number 1 – How to balance a checkbook

Sometime before I got my drivers license I took an elective “personal finance” class in high school, the course title was generous based on what I took out of it. Literally the only thing I remember was being taught how to balance a check book. The biggest project was following a mythical persons expenses for a month and seeing if the balance was correct at the end.

Internet banking was a real thing at this point in time and I figured why not let the computer do the math for me….. To this day, I have never balanced one.

The first time I got a check book with those little carbon copy pages I forgot to put that piece of plastic under the first check and ruined the next 10 CC pages.

Lesson 1 – fail

Money Lesson number 2 – How powerful compound interest is

*Disclaimer* This example has been blogged about extensively – even found this gem from Budgets are Sexy (I had this post 90% written when I decided to google the example and see if anyone else got the same lesson). I am going to tell my story quick and skip all the fun doubling math.

Bringing myself way, way, way back to the 5th grade for this one – 1990 something – my teacher posed this question:

Would you rather have $1 Million today, or a penny that doubles every day for a month?

Unsurprisingly to most, all 30 hands go up saying they want $1 Million today! What can I buy with a penny? $1 million buys a lot of baseball cards (not sure what kids buy these days – probably something way cooler than I had back then).

Long story short – doubling a penny everyday ends up being over $10 million (if you haven’t seen this example before, check the link above).

Yep, bunch of chumps would take 1/10th the payout.

Its not a realistic example of compound interest, being 100% returns and all – but you aren’t investing a penny either.

Lesson 2 – Valuable!

Side note – I remember being pissed off that my 1990s calculator didn’t have enough places to multiply the pennies half way through the month and wasn’t impressed that I had to do it by hand

Money Lesson Number 3 – You will have student loans until you are 40

My 7th grade math teacher, I don’t remember his name, but he always wore a sport coat with tennis shoes. Its a classic look.

I don’t know why, but this is the only thing I remember him ever saying to us “You will have student loans when your 40.” His reasoning was something along the lines of everyone that went to college still has them, I still have them and your parents still have them.

Motivator of the year, really wanted to go get a degree after that pep talk!

Proving him wrong would be a little more satisfying if I could email him when I was done – I will spam [email protected](All email servers) until I find him.

If that time would have been spent showing us what an extra $100 payment towards his balance every month would have saved him.

Lesson 3 – Fail

Why Blog about this?

I promise I am not trying to waste your time – outside of the obvious reasons (the internet destroyed checkbooks, compound interest is cool and some teachers are bad motivators) – there are a few other things that I want to highlight:

Need for instant gratification – The penny example above is obviously an extreme example, but this mistake is still made on a daily basis by the masses. Spend a dollar today instead of investing it for tomorrow.

Everyone is in a different situation – We all come from different financial backgrounds, there are legitimate reasons to not save/invest your money now, as there are legitimate reasons to take the money today vs waiting 30 days.

Young people aren’t being educated about $ – The best money lesson I remember from grade school was in 5th grade – personal finance will affect everyone consistently in their lifetime and it is completely ignored. Everyday I read blog comments saying “I wish I started doing this earlier” – and unfortunately it takes a series of financial mistakes for many people to wake up and start learning.

I could grab any of the 20 blogs I read consistently and students could learn more in 1 afternoon about money than I did in 10 years of schooling.

Action Items: Teach someone something about money (preferably a young person that can benefit early). Any money lessons from grade school that you remember? I am curious if anyone had similar experiences (good or bad)

Personal Capital: Personal Capital has a ton of great Free features, you can track your spending, net worth and even analyze your portfolio. It has top notch security and I am able to connect all of my accounts. Saves a ton of time!

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I can’t recall learning about balancing checkbooks I school, but we did touch on compound interest. I believe you are correct when you pointed out that your lesson with student loans would have had a better impact if your teacher had taken the time to explain what an extra payment on loans could do. In addition to talking about compound interest, the effects of paying extra on debt would be worthwhile to add to school curriculum.

Our district had Consumer Math, but it could be replaced by advanced math classes for credit. So, the advanced students missed out on the basics like checkbook balancing, investing, etc. The thought was that we could figure the basics out on our own, but it seems like most people have to fail a few times before they truly learn personal finance.

I also find it interesting that it was called “Consumer” math, as if the only goal was to buy stuff.

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